The fix for California’s housing crisis? There is no easy solution, but here are some ideas

The state Capitol dome glows in the early evening.
Rich Pedroncelli
AP file

Note to readers: Each week through November 2019, a selection of our 101 California Influencers answers a question that is critical to California’s future. Topics include education, healthcare, environment, housing and economic growth.

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“There are Californians working multiple jobs to keep their families sheltered and there are teachers that cannot afford to live in the communities they teach. If we truly want a California for all we have to build housing for all.

“The state is taking a multi-pronged approach to address the housing crisis: providing resources and incentives for local governments to plan for their fair share of housing; integrating housing and transportation planning and investment; working with locals to reduce regulatory barriers to production; making state excess property available for affordable housing; and providing financial assistance to developments to ensure long-term housing affordability.

“The Governor also understands the pressures currently faced by vulnerable renters in this state and has committed to working with the Legislature to address this issue. The lack of an adequate supply of housing at all income levels is estimated to cost the state $140 billion annually in lost economic activity. All Californians must come together and say yes to housing. The state cannot address the housing crisis alone and a rising tide lifts all boats.”

Anthony Rendon – Speaker, California State Assembly

“Addressing the housing crisis requires that we realize affordable housing is connected to nearly every other issue California faces. That complexity means a shared sacrifice; each community of interest being flexible for the greater good. Wildfire, climate change, water supplies and quality, environmental protection, efficient transportation and protecting good jobs are all involved. We cannot solve all of these at once, but we cannot solve them if we are not aware of how the pieces fit together.

Scott Wiener – Chair, State Senate Housing Committee

“California has a terrible housing shortage - 3.5 million homes and growing. This shortage pushes people into poverty and homelessness, leads to evictions, and pushes out working families.

“Ensuring everyone has access to housing they can afford will always be a multi-pronged approach. One of the most important strategies is making it legal to build enough housing. Right now, multi-unit buildings - such as apartment buildings and condos - are illegal in 80% of California, since, through zoning restrictions, most cities limit new housing to single family homes only. This restriction ensures that housing remain very expensive and perpetuates our housing shortage.”

Shannon Grove – Republican Leader, California State Senate

“Millions of Californians struggle to find housing that’s affordable and suits their needs. A February 2019 report from the nonpartisan Legislative Analyst’s Office stated, ‘The crisis also is a long time in the making, the culmination of decades of shortfalls in housing construction. And just as the crisis has taken decades to develop, it will take many years or decades to correct.’

“Ultimately, it comes down to the nuts and bolts of the situation. We know building homes is an expensive business in the Golden State. The majority party has created barriers to housing construction such as overburdened regulatory policies. Continuous fees and delays also add tens of thousands of dollars to the cost of a new home. Republicans have supported expanding tax incentives for below market rate housing construction to help those who find it hard to own a home.

“The Department of Housing and Community Development’s (HCD) most recent housing assessment estimated that California needs to build an additional 100,000 units per year over recent averages of 80,000 units per year to meet the projected need for housing in the state. In short, the state must build 3.5 million more homes by 2025. That’s roughly 350,000 units a year over the next seven years, versus an average of just 85,000 homes a year over the last seven years.”

Carolyn Coleman – Executive Director, League of California Cities

“To address the housing supply shortage and to provide more affordable housing for California’s working class, the most important step is to develop a long-term, robust, and ongoing source of funding to invest in affordable housing and incentivize development. When the state abolished redevelopment in 2011, it wiped out a significant source of funding that was subsidizing affordable housing across the state. We need to replace redevelopment with a more tightly defined and accountable tax increment financing tool that is specifically focused on subsidizing affordable housing and the infrastructure necessary to support that housing. We urge the legislature and administration to seriously consider restoring a robust, ongoing form of property tax increment financing. City officials see first-hand the immense hardship on families caused by our housing crisis. Throughout the state, working class Californians in our cities are struggling to find affordable housing in the communities where they work, take their children to school and raise their families. As such, the League, and its member cities, are active partners in the quest to find meaningful, workable solutions. “

Dan Dunmoyer – President and CEO, California Building Industry Association

“Support Governor Newsom’s ambitious ‘Marshall Plan’ to build 3.5 million homes over the next eight years because adding to the supply of housing will solve 90% of the affordability problem. This fact is proven every day if you cross the border to Oregon, Arizona or Nevada where the same home costs a fraction of what it costs in California.

“Stop adding costs to the home-building process. Seems like an obvious statement, but many state and local leaders are promoting more costly laws and regulations even in the midst of our housing crisis. This means no new regulations, no more mandates, no more decade long reviews by city hall. It can take 20 plus years to build homes in California, and 20 months (or less) everywhere else.

“Roll back the out of control building fees because $150,000 to $200,000 per home is simply unsustainable. You can’t build affordable homes if the 560 different local government fees that new homebuyers and Californians are shouldering continue to increase unabated.

“The policy solutions are simple – the housing crisis won’t be solved until building homes becomes more affordable – the political courage to make the necessary policy changes to a flawed system is the hard part.”

Perry Pound – Managing Director of Development for Los Angeles County, Greystar

“To solve the Housing Crisis, more housing must immediately be built at every level - from market-rate to affordable. Housing supply must be brought into balance with housing demand. Only then will rental prices decrease.

“Our elected officials have shown an increased focus on the housing crisis, understanding that this is the issue. If ‘jobs don’t have a place to sleep’ quoting the Governor, then they will be relocated out of state, harming the California economy. Newsom has delivered a budget with an increase in available dollars to be spent on affordable housing, as well as begun to hold cities accountable to meeting their housing element. Senator Wiener has sponsored SB 50, a bill designed to increase density along transit corridors. These are welcome reforms.

“But what we really need is CEQA reform. It should be possible to achieve housing entitlements and permits within one year (as in most other states), rather than the routine five to eight-year timeline that exists today. Such an improved timeline would lure more investment and development dollars into local economies and make it easier to deliver projects for California’s workforce.”

Cesar Diaz – Legislative and Political Director, State Building and Construction Trades Council of California

“The primary cause of the affordable housing crisis in California is that workers’ paychecks have not kept pace with housing prices. Even when we make it easier to build through streamlining of the local approval process, the market reality is that developers do not choose to include affordable, or pay higher wages, unless we give them a reason to. Therefore, the most important step is to bridge the divide between income and rents, at the same time scaling up the production of affordable housing to meet the needs of the working class.

“Any public assistance for development, including financial or regulatory incentives, should come with housing affordability and job quality guarantees. These guarantees would focus state and local resources on projects that truly bridge the jobs-housing gap through prices that reflect all sectors of the local labor market, as well as smart growth that reduces polluting commutes, and create skilled trades career opportunities for young men and women through union apprenticeship programs. This approach addresses income inequality at both ends, by increasing the supply of lower priced housing and decreasing the demand for it through higher wages.”

“California has an affordable housing problem. We don’t build enough of them to the tune of a 100,000-unit deficit every year. And the shortfall is even bigger around affordable rental homes — about 1.5 million units less than the low-income families who need them. This shortage drives up prices and puts vulnerable residents at risk of displacement. But there’s a fix in Sacramento right now. Senate Bill 50 would help by allowing the creation of much-needed homes in existing communities, near jobs, and near public transit choices. Critically, the bill would force a lot of these homes would have to be affordable. That is important for quality of life issues and for the effort to stave off climate impacts, since the lack of affordable homes has forced thousands of Californians into long and grueling drives. According to census data, more than 500,000 workers in the state have one-way commutes of more than 90 minutes. With SB 50, California can demonstrate that meeting its housing demand can be part of the climate solution.

“While local decision-making around housing is important, the state has a role to play - specifically, to ensure that all communities allow housing. We need to move away from allowing cities to opt out of building housing.

“As we build the millions of new homes that we so desperately need in California, we need to do it sustainably. That means allowing more housing near where people work and near public transportation. By legalizing housing and then building it sustainably, we can move the dial on this problem.”

Ashley Swearengin - President and CEO, Central Valley Community Foundation

“Affordable housing close to local and regional transit needs to be heavily incentivized. Period. Full stop. We’ve nibbled at that apple with limited results. Now, it’s time to eat the whole thing. State legislation needs to relax environmental regulations in targeted development areas and allow local governments to waive development fees without having to back fill the lost fee revenue with another source of funding that local governments simply don’t have. Inland California requires even more aggressive incentives and support to build affordable housing close to transit – lowering or removing regulatory barriers alone doesn’t cut it. In Central Valley cities like Fresno, for example, it is nearly impossible to finance affordable housing close to transit. The real estate market is completely upside down and only works for green field development on the outskirts of town. Affordable rents simply don’t cover construction costs – even with regulatory streamlining and waiving local fees. These major markets of California that are the youngest and among the fastest growing in the state need dedicated sources of capital to get the gears of the market forces working again to provide a more diverse supply of housing.”

Lisa Hershey – Executive Director, Housing California

“The most important step is for our state lawmakers to pass solutions that provide affordable homes specifically for Californians struggling the most. The phrase ‘working class’ doesn’t tell us who those members of our communities are, but we know it includes Californians working full time on minimum wage who can’t afford a rental near their jobs or kids’ schools, or near their families and social safety nets. The vast majority of Californians earning the least are forced to spend more than half of their income on rent, with little left over for necessities like food, transportation to work and school, and health care. People of color are disproportionately impacted. Moreover, many Californians who work or are in school are sleeping on the streets, in their cars, or in shelters. We cannot trust the market to ensure that the most vulnerable among us have stable housing. Instead, we need solutions that have been proven effective, invest real dollars into creating affordable and permanent homes for those hurting the most, provide rental assistance to help families secure a home quickly, and protect renters from losing their home and falling into homelessness. These solutions are a critical yet feasible step.”

Curt Pringle – President, Pringle and Associates

“Political will is the most important element in creating affordable housing for California’s working class families. Housing for our economically diverse workforce should be a priority for every city leader in California. Every city should seriously deploy strategies to encourage and support development of ‘workforce”/affordable’ housing locally. Affordable housing is a benefit to cities, not a detriment and local leaders need to develop and share that message to educate their constituents about the benefits greater housing stock brings to communities. Sacramento can assist in this – not by taking over local land use decision making, but through other incentives, like connecting affordable housing to increased transportation and infrastructure funding that will support the cost of the increasing population.”

“One thing is clear, there is no silver bullet to solving the state’s housing crisis. As housing becomes more unaffordable in our job centers, commute times and distances have exponentially increased, placing a greater strain on our transportation infrastructure. More and more Californians have migrated from our densely populated urban areas to outlying suburbs and rural areas to achieve their dream of homeownership. That’s why transportation and housing planning were officially linked together in 2008. Pro-housing groups have long advocated for a “stick” to hold accountable local governments that fail to plan for workforce housing construction. Like Gov. Newsom, Realtors strongly support and encourage the construction of new and much needed, workforce housing units.

(We support) AB 1568, by Assemblyman Kevin McCarty, will reduce vehicle miles traveled by incentivizing local governments to appropriately plan for housing. AB 1568 restricts access to some transportation grant funds should a local government fail to plan for their fair share of their local housing need.”

“Fixing the housing crisis for working class Californians will require a multifaceted approach that includes incentives and subsidies as well as novel options like micro units, cooperatives, and co-living. It is critically important to find ways to lower the cost of housing construction, which has been a primary driver of high housing costs; the emerging boom in modular housing holds promise. Results will take time. So, we must couple innovative financing and construction tools with protections for current tenants who are at risk of being evicted from their homes due to exorbitant rent increases.”

Rob Lapsley – President, California Business Roundtable

“Basic economics proves that increasing the housing supply is the only real long-term solution to bringing down costs and providing stability to housing and rental prices. But politics, not economics, is now driving the discussion. The voters of California have said that rent control is not the answer; there were only two counties—both in the Bay Area—that supported Prop 10 just 5 months ago. Moving forward, we need to treat the housing crisis with the same level of policy urgency and flexibility that the Legislature is treating the cannabis industry. But the most important step is for large and small property owners to come together and define a workable policy that stimulates new construction while ensuring the greatest access to affordable units in the shortest amount of time possible.”

Jon Coupal – President, Howard Jarvis Taxpayers Association

“No one disputes that housing affordability is a critical issue for the State of California and its economy. An often overlooked remedy would be a significant increase in the Homeowners Exemption.

“The current Homeowners Exemptions provides only a miniscule amount ($70) of tax savings because it only exempts $7,000 of value. This hasn’t been increased since 1974 when the median priced home sold for $21,000.

“Even with Proposition 13, California is not a low property tax state. Recent rankings have us in the top 10 among all states. Plus, California homeowners have been hit with billions of dollars in so-called “parcel taxes,” an insidious form of property taxes that didn’t even exist prior to Proposition 13’s enactment in 1978. Parcel taxes are highly regressive as most are imposed on a flat rate. When parcel taxes are added to the explosive growth in various service charges, the need for supplemental tax relief for homeowners is clear. “

“An increase in the exemption from $7,000 to $32,000 will save every homeowner in California an additional $250 per year. This may not seem like a lot, and probably won’t be noticed by wealthy homeowners, but will be a welcome boost to the poor and middle class homeowners struggling to make ends meet. “

Maria Salinas – President and CEO, Los Angeles Chamber of Commerce

“Policy makers and stakeholders need to recognize there is no magic bullet or one piece of legislation that will solve for our housing affordability crisis. Flexibility, both in our approach to policy and our mindset to what is a community, will be key. We need to pursue increased density and update zoning where it makes sense, allow housing developers access to the same type of expediting process we give athletic venues when specific benchmarks are met, and reduce impact fees that add to the financial burden. With these steps, the cost to build housing other than market-rate housing pencils out. We also need a statewide and neighborhood by neighborhood dialogue on what it means to be a community, and the importance of creating opportunities that allow our teachers, nurses and public safety officers to live where they work alongside business owners and tech entrepreneurs.”

Carl Guardino – President and CEO, Silicon Valley Leadership Group

“$255,000. That’s the household income needed to even qualify for the median priced home of $1,250,000 in San Jose, the city in which I was born. My blue-collar, working class father and stay-at-home mother raised four sons, on one construction worker’s income, in a home my parents purchased in San Jose for $17,000. That is not a typo.

“So what happened? California has ignored the need to build rental or for-sale homes simply to meet our population growth for almost every year since 1989. Thirty years of neglect has created a housing crisis that has left our state 3.5 million homes short, and priced working class families out of the same communities in which they were raised.

“Diagnosing the problem is the first step. Fixing it is the harder step. The main step we must take is to create an environment in which we can build homes in California again. California is a ‘fixer-upper’ when it comes to the policy changes needed at the state and local level to address this crisis: We need further reforms to the Regional Housing Needs Assessment (RHNA) process that actually lead to the production of homes rather than the production of plans. We need meaningful reforms to CEQA to prevent a great environmental law from further abuse for non-environmental purposes. We need to ensure that when we make billion dollar investments in fixed rail transit systems that we zone for appropriate heights and densities for homes (and jobs) within a half-mile radius of those transit stations (along the lines of SB 50 by Senator Weiner) and we need to support local elected leaders wiling to cast tough yes votes by standing with them at city and town council hearings across our state.

“Fixing our housing crisis - three decades in the making - is possible. Yet it takes a combination of political will and political skill. Governor Newsom has set his compass in the right direction. It is incumbent on all of us - including our 350 innovation economy employers at the Silicon Valley Leadership Group - to build the coalitions needed to ensure that California builds more homes.”

Janice Rutherford - Supervisor, San Bernardino County’s Second District

“We must reform the California Environmental Quality Act so legal challenges to housing projects stem from real environmental concerns rather than political, labor, or NIMBY motivations. Too often, CEQA is used to stop housing projects (especially multi-family and attached housing) that are critical to our State’s working and middle-class families.”

Amanda Renteria – Board Chair, Emerge America

“The housing solution begins and ends with the ability to access and deploy massive resources throughout the state for building new housing stock. With the passage of regulatory relief and a $4 billion housing bond, the next major step is for local leaders to plan, design, and execute their own customized approach to affordability in their region. As that happens, it will be most important for the Governor’s office to hold localities accountable, measure results, and share best practices across the state. “

Jim Boren – Executive Director, Institute for Media and Public Trust at Fresno State

“Sound-bite ‘solutions’ are easy to come up with, but actually implementing them in a way that increases affordable housing near where members of the working class have jobs is much more complicated. It will take courageous politicians supported by voters to increase the housing supply by allowing residential projects to be built in urban areas, and with taxpayer incentives to make them financially feasible for all parties.

“We also must take a hard look at state and local regulations that stand in the way of creating affordable housing. We can protect the public interest, including the environment, while easing regulations that are roadblocks to building quality housing units.

“Affordable housing also must be near an efficient transportation system that allows workers to quickly move from where they live to where they work. Housing and transportation policies must work together.

“Unfortunately, decision-makers remain timid when it comes to pushing workable affordable housing ideas through the government system. Only bold leadership will get us through this crisis, and the other big challenges facing California.”

Dan Schnur, a veteran analyst and longtime participant in California politics, is director of the California Influencers series for McClatchy.